Dendritic cells (DC) play a pivotal role in regulating immunity, establishing immunologically privileged tissue microenvironments and maintaining homoeostasis. It is becoming increasingly clear that one key mechanism that mediates many DC functions is production of the immunomodulatory enzyme indoleamine 2,3‐dioxygenase (IDO). For pathogens that cause chronic infection, exploitation of host DCs is a solution to establish and persist within a host. Leishmania parasites cause a range of clinical manifestations, all involving chronic infection, and are proficient at avoiding immune responses. We demonstrate here that infection of human myeloid‐derived DC with L. major and L. donovani induces IDO expression using a mechanism that involves autocrine or paracrine stimulation with a DC‐secreted factor. Leishmania‐induced IDO suppresses allogeneic and tetanus toxoid–specific lymphocyte proliferation, an inhibition that is reversed with the IDO inhibitor, 1‐methyl tryptophan (1‐MT). Furthermore, IDO expression by human DC does not require live Leishmania infection, as parasite lysates also up‐regulate IDO mRNA production. Our data suggest that one mechanism Leishmania parasites utilize to circumvent immune clearance may be to promote the induction of IDO among host DC within the infection microenvironment.